Why Indian women need wealth plans, not just financial products

Reviewing the portfolio of a prominent female entrepreneur recently revealed a striking paradox: an immense talent for creating wealth, yet a total absence of a design for it. Her balance sheet was formidable, with high-yielding equities, prime commercial real estate, and diversified fixed income, all built through years of aggressive, disciplined strategy.

But beneath this strength lay a systemic gap. While her wealth holdings were complex, they were not integrated. She had created a fortune, but she had not established a wealth philosophy that ties together her current wealth and her perpetual estate. By not addressing longevity risk and the smooth transition to the next generation, she had become a master of the "growth" phase of the Wealth Lifecycle, but she had not addressed the "stewardship" element.

A new era is unfolding in the way women in India control wealth. Data from the Association of Mutual Funds in India show that women’s asset management almost doubled to Rs 11.25 lakh crore by March 2024. Axis Mutual Fund says that 72% of women are making their own financial decisions. This is a triumph of engagement. However, for HNI and UHNI women, the bar has moved. In the upper echelons of wealth, simply "picking good products" is no longer enough; the challenge is no longer just making money, it’s orchestrating it.

Asset expansion through a disjointed strategic approach

The wealth management process is generally initiated with the goal of producing quality investment offerings (i.e., the equity offering will perform profitably, while the tax-deferred offering will perform equally well in its function). For HNWI and UHNWI female clients with multiple asset classes, the product-centric approach will not deliver a functional product portfolio due to fundamental issues with product mix.

The inability to develop a comprehensive product mix overlooks tax efficiency across product lines and liquidity management during market turmoil. Planning your wealth takes this to the next stage, shifting the focus from the product's total return to the risk of loss, which will provide a return of capital over multiple transactions. The true definition of advice is found in a consistent, comprehensive manner rather than in execution.

Engineering long-term financial security

Women go through a unique financial lifecycle that is not addressed by the typical product sales approach. Statistically speaking, women do live longer than men. As a result, the retirement savings must be preserved for a much longer period than a man's. This requires a highly precise approach to inflation management.

Furthermore, the lifecycle of a woman who is a wealth builder includes planned career breaks or entrepreneurial detours that do not allow for a linear path to wealth creation. A structured wealth plan prepares for these eventualities. It uses advanced asset allocation strategies that adapt to evolving cash flow needs. It converts a static safety net into a robust, compounding financial engine customised to the woman's risk profile.

Intergenerational complexity and legacy

For the affluent woman, wealth is typically not an isolated entity but rather an intergenerational one. In addition to creating wealth, there is a critical need to preserve it from systemic shocks and to pass it down seamlessly.

This entails highly sophisticated arrangements, such as private family trusts, tax-efficient estate planning, and philanthropic planning, that involve far more than a mutual fund ever can. A strategic plan helps ensure that an affluent woman's wealth is used to support her legacy in an efficient, unambiguous way.

The future is strategic ownership

The story around female wealth creators must change. Commending participation in the capital markets is the minimum; requiring strategic ownership is the ultimate next step. For financial empowerment among women in India to be complete, women must demand a wealth-creation solution uniquely designed to align with their aspirations, futures, and legacies. The move from savings to a strategy is not only a financial evolution; it is the ultimate evolution of financial independence.

 (Sanaa Zia Khan is Director, Centricity Overseas Financial Distribution Pvt. Ltd and Founding Team, INVICTUS, Centricity WealthTech.)

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)